Saving For Retirement

Last month our nation’s leaders declared a “National Save For Retirement Week”. This was held October 16, 2011 through October 22, 2011. It was the first congressionally-endorsed national event that formally called on employers to promote the benefits of saving for retirement. It also encouraged employees to take full advantage of employer-sponsored retirement plans.

This themed week stems from the lack of retirement funds for most Americans. Experts predict that retirees will need anywhere from 80.0% to 100.0% of their pre-retirement income to maintain their lifestyle after retirement. However, surveys show that most Americans remain unprepared for retirement.

National Save For Retirement Week was created to help Americans understand how critical it is to save now for their financial future. Although many workers participate in company-sponsored retirement plans and will also be eligible for Social Security, it might not be enough to live comfortably. Most Americans will need to save for retirement outside of employer-sponsored plans, or increase contributions in order to meet retirement goals. Statistics show that outside of employer-sponsored plans, most employees save virtually nothing. Trends over the last 30 years show that employers are replacing pension plans with tax deferred savings plans. This puts a large burden on employees to take action and begin investing within their employer-sponsored plans. Here are four simple examples of what it takes to prepare for retirement:

1.By saving just $10.00 per week in a deferred compensation plan for 40 years with an average rate of return of 7.0%, the account will reach over $100,000.00. This is a great example of how powerful tax-deferred savings can be.

2.Do not feel hopeless if there is less time to save. It is possible to save more than $73,000.00 by putting $60.00 a month into a tax-deferred savings account for 30 years, at a 7.0% return.

3.Another great way to save money is to simply increase contributions. It can make a significant difference in final retirement savings. By adding $25.00 to a $100.00 biweekly contribution, assuming that there is a 7.0% return, the account can increase from $264,327.00 to more than $330,409.00 in 30 years.

4.Saving is not always the easiest route to take—especially if income is limited. However, the Government has a Saver’s Credit. If eligible, it is possible to receive money back when filing a tax return.

It is clear that most Americans are a step behind when it comes to retirement. Make sure to take initiative now so that it is possible to live comfortably and securely throughout your retirement life.